BIOPETROL growth continues
- Sales rise by one-third
- EBIT negative, as expected, impacted by valuations
- Locational advantages support prospects for the future
The first three months of business year 2008, as expected, proved to be difficult because of a cumulation of negative influences on the biodiesel market. The high cost of rape oil and soya oil, subsidized biodiesel imports from abroad (B99), as well as the increase in the mineral oil tax on the B100 market, now 15 eurocents per litre, put further pressure on margins and caused the German B100 market to collapse almost completely. Even given an overall rise in price levels, the price difference between biodiesel and fossil diesel at filling stations did not reach the 10 eurocents required for biodiesel sales on the B100 market. The blending market is making use of cheaper imports (B99) or is using the low import prices as a benchmark for negotiations with the European biodiesel industry. Most biodiesel producers are compelled to operate their facilities well below capacity, while some have closed their plant down or even filed for insolvency.
In this difficult market environment, BIOPETROL maintained its position with growth in sales of about one-third over the first quarter of 2007. In all, sales amounted to 56.6 million euros. That is 14.3 million euros or 33.8% more than in the same period of the previous year (42.3 million). This strong growth in sales can definitively be ascribed to the works in Rostock, which has taken on an important role for the successful development of sales markets outside Germany. In the first quarter of this year, Biopetrol sold 57,685 tonnes of biodiesel (previous year 51,919 tonnes) and 4.497 tonnes of pharmaceutical glycerine (previous year 3.333 tonnes). Correspondingly, the works were operating at around twothirds of their nominal capacity on average.
EBITDA fell to -5.521 (previous year 1.245) million euros, and EBIT dropped to -6.314 million
(previous year 454 thousand) euros. Correspondingly, the EBITDA and EBIT margins fell to -9.8%
(previous year 2.9%) and -11.2% (previous year 1.1%) respectively. The group's net loss reached - 7.100 million euros, following a profit of 648,000 euros in the first quarter previous year. This trend in the results reflects the market situation outlined above. The result also includes a loss of 4.272 euros due to the valuation according to IFRS of derivative financial instruments and accrual for onerous sales contracts at market prices for the relevant dates. Without these effects, the result would have been -3.628 million euros.
Growth strategy is continued
BIOPETROL's third installation at Rotterdam is a substantial asset for the further internationalization of our business. It will have an annual productive capacity of 400,000 tonnes of biodiesel. Thus, at the end of 2008, BIOPETROL will have more than doubled its currently available capacity of 350,000 tonnes annually. Supplementing the production of biodiesel, up to 60,000 tonnes of high-quality pharmaceutical-grade glycerine can be manufactured when the plant is operating at full capacity.
CEO Klaus Henschel points out that "This operational facility, established on an area of 30,000 m² by Lurgi AG, our partners in the project, is located at Europe's largest refinery centre and, with the best logistical ties to road, rail, ship and pipeline, it meets all prerequisites for further expansion in Europe.
The staff necessary for operating the installation have already been taken on and are preparing in Rostock and Schwarzheide for their future tasks. The cost of this is, however, a further burden on the current result, since it is not yet balanced out by sales figures".
A solid foundation is our support in difficult times Operational cash flow was the negative in the period from January to March 2008, at 14.699 million euros. This development is mainly to be ascribed to changes in current assets (-11.111 million euros)
and the operational loss. Cash flow from investment activity (including a part-repayment of subsidies received) was -6.492 million euros. Cash flow from financing activity is characterized by the first interest payment for the convertible bond, amounting to 3.000 million euros. The payment annually until 2012 is made in February. Despite a rise in inventories, BIOPETROL had 6.389 million euros in liquid assets on the reporting date, as well as a line of credit of up to 30 million euros for the financing of current assets, not taken up on the reporting date.
The ratio between equity capital and borrowed capital has changed slightly from the previous year, at 39.7% (previous year: 43.3%). Compared with the end of 2007 it has improved slightly, by 1.4 percentage points (31 December 2007: 38.3%).
In a persistingly very difficult business environment, Biopetrol expects to do better than its competitors.
BIOPETROL benefits from good locations, modern technology and the developing trade in pharmaceutical-grade glycerine. There are competitive advantages here that, together with strict cost control, a partial changeover to alternative raw materials such as tallow and waste edible fats, and reinforced trading activity will contribute to BIOPETROL's reaching the next phase in the development of the market. We see that next phase as characterized by an end to speculation in raw materials, a ban on heavily subsidized B99 imports, the mandatory use of raw materials derived from sustainable sources, a relief of the burden on the market as overcapacities disappear, an increasing interest on the part of other European countries in using biodiesel, the start of a mandatory blending quota of alternative fuels in the USA, and a European energy policy oriented once more towards its original objective, the safeguarding of supplies.
This press release represents neither an offer for sale nor a request for the submission of an offer to purchase or subscribe to securities. This announcement and the information contained therein are not intended to be directly or indirectly passed on to or within the United States of America, Canada, Australia or Japan.
BIOPETROL INDUSTRIES AG
With its German, Dutch and Swiss subsidiaries, BIOPETROL INDUSTRIES AG, which has its head office in Zug (Switzerland), produces and sells biodiesel and pharmaceutical-grade glycerine of the highest quality. Among our customers are the oil industry and oil traders, large-scale fleet operators, public short-distance transport, as well as the agricultural and construction industries. The pharmaceuticals and cosmetics industries are in addition supplied with bioglycerine of pharmaceutical quality.
At the present date, BIOPETROL INDUSTRIES AG has annual productive capacities in Schwarzheide and Rostock of around 350,000 tonnes of biodiesel and 30,000 tonnes of pharmaceutical-grade glycerine. In Rotterdam, BIOPETROL is building an installation with an annual productive capacity of 400,000 tonnes of biodiesel and 60,000 tonnes of bioglycerine. By the end of 2008, annual capacity should then be more than doubled to a total of 750,000 tonnes of biodiesel. Further expansion of capacity in Rotterdam is planned. We are working actively on extending our product range, based on the coproduct bioglycerine.